Microgrids are local power systems that may or may not be connected to the distribution system and are typically controlled by the local operator.Interest in microgrids is rising and it is likely that the number of microgrids connected to distribution networks will increase.Currently,there is no consensus on how microgrids will interact with the distribution system-they have the potential to threaten stability,or to assist.However microgrids,with their emphasis on sophisticated control in order to manage their particular challenges,address many of the problems that will be required to overcome in realizing the smart grid.This paper examines some of the issues involved in connecting microgrids to the distribution networks,and illustrates how microgrids have a key role to play in the development of the smart grid.